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Georgia VAT-exempts cryptocurrencies

Mon, 15 Jul 2019, 06:02 am UTC

Georgia becomes the latest nation to exempt cryptocurrencies from value-added taxes (VAT), a move that supports Bitcoin’s status as a currency, according to Bitcoin.com.

As per the report, Georgia’s finance minister Ivane Matchavariani signed a bill, which took effect last month, regulating the taxation of firms that mine cryptocurrencies. The bill will see local citizens transact fiat-cryptocurrency exchange without being subject to VAT.

However, Matchavariani underscored that Georgian lari will still be the only legal tender in the country, adding that cryptocurrencies cannot be used for making payments for goods and services.

Notably, the bill only offers VAT exemption to overseas mining companies. Thus, it is likely locally registered crypto firms may move their official headquarters out of Georgia soon, although their operations will remain in the Caucasus, thanks to the country’s cheap and abundant hydropower plant-powered electricity.

The bill also clarified the definition of cryptocurrencies as “digital assets that are exchanged electronically and based on a decentralized network. Their exchange does not require a reliable intermediary and they are managed using distributed ledger technology.”

Meanwhile, in the United States, the Internal Revenue Services (IRS) is reportedly considering requiring tech giants to report their users’ crypto-related activities to detect criminal tax evasion cases involving cryptocurrencies. The taxman allegedly wants to conduct interviews, open-source and social media searches, electronic surveillance, and serve subpoenas to companies to crack down tax evaders.

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